“Indiabulls sells 50% stake in office assets for Rs 464 cr to Blackstone: The company’s existing wholly-owned subsidiaries Ashkit Properties Ltd and Yashita Buildcon Ltd have become joint ventures,” reported Business Standard.
Shardul Amarchand Mangaldas & Co advised
JSA advised
According to Shardul Amarchand, the “transaction pertains to the subscription by Blackstone of: (i) equity shares of Ashkit Properties Limited, amounting to 50% of the paid-up and issued share capital of APL; and (ii) equity shares and compulsorily convertible debentures of Yashita Buildcon Limited, amounting up to 49.9% of the paid-up and issued share capital of YBL. APL holds land in Gurugram, on which an IT/ITes project is being developed”.
2018-12-20
Deal value: US$ 33.5 million
{incomplete}
Comments
There will be some grey borderline areas, but I think this is a more sustainable classification that is also followed by other league tables.
Any and all feedback or thoughts are welcome.
This is clearly a PE transaction in anybody’s book. In that case what will you classify as PE? Everything will have a sector.
Are you just trying to keep CAM on top?
Do also have a look here for what else is currently in the real estate bucket:
https://www.legallyindia.com/real-estate-property/real-estate-property
The trouble with real estate M&A is not that it doesn't involve M&A, particularly if there are companies concerned, but that the deal values in pureplay real estate M&A (or infrastructure projects M&A), tend to dwarf the more vanilla corporate M&A, which would distort the league tables.
Would be happy to get more feedback from readers.
This was staffed with corporate and PE lawyers.
We're trying to come up with some easy rules that won't get too complicated and that can apply across the board.
This is clearly a real estate investment by a PE player, so it gets complicated, though...
Along similar lines though, what about M&A? If a company is buying another's real estate (through a subsidiary company), is that a real estate deal or vanilla M&A?
If a private equity is acquiring 50% stake in a company, which is engaged in “construction and development” and not “real estate business”, it ought to be considered as a private equity deal, and not a real estate transaction.
Also, as a yardstick, the deal contours (acquisition of property vs acquisition of rights in a company) should determine a deal, as opposed to the nature of lawyers involved since a deal will have completion lawyers, litigation lawyers etc., and based on that the nature of the transaction cannot change.
Lastly, under the exchange control regulations, a non resident cannot engage in real estate business, or acquire property. Therefore, if the transaction involves a non resident, and the sector is that of construction and development, irrespective of the firm (CAM or SAM), the same should be classified as a private equity deal.
While this may have been true when development rights were granted merely by executing a joint development agreement/collaboration agreement but as the market has matured, even land owners and developers are collaborating in ways which are complex and the documentation wouldn’t be different from what is executed in a pure play M&A/P&E V&C transaction.
To give you an example, lets look at a transaction where the developer and the land owner are entering into a collaboration on a profit share basis. Many a times such a transaction would require the following structuring:
1. Execution of a collaboration/JDA between the land owner and a special purpose vehicle which would be designated as the "developer entity" and the development rights would be granted to this entity;
2. The developer entity could either be a private limited company and/or a LLP;
3. The land owner and actual developer would become shareholders'/partners of the LLP;
4. If this transaction is relation to a development of a warehouse, then the ultimate aim could be that the “developer entity” is itself sold and hence the shareholders agreement/LLP agreement would have inter se rights and obligations between the land owner and the actual developer including but not limited to veto matters, exit rights, exit thresholds, transfer restrictions etc.;
5. Further the parties may also subscribe to various instruments to take money out from the SPV till the SPV itself is sold;
6. This would in no manner be different from lets say a JV arrangement between 2 parties in any other sector and which would fall within M&A/PE&VC categorization as per your parameters.